Skip to content

Allowed Quote by Ben Bernanke

“I would argue that no financial instrument counted as regulatory capital should be allowed to receive any protection from losses.” quote by Ben Bernanke
Download Open image
“I would argue that no financial instrument counted as regulatory capital should be allowed to receive any protection from losses.”

Ben Bernanke

About This Quote

Source Speech: Testimony before the U.S. Senate Banking Committee, 2009

Regulatory capital instruments should not be shielded from losses, ensuring banks bear true risk.

In simple terms: Capital must absorb losses, not be protected.

Key Takeaway

Demand true risk absorption.

Themes

risk management bank regulation financial stability

Mood

cautious serious

Type

policy financial.

When to use this quote

  • bank governance
  • stress testing
  • investment decisions
  • loan underwriting

Key Concepts

Moral hazard capital adequacy

Questions to Reflect On

  • How would unprotected capital affect lending?
  • What alternatives exist for risk mitigation?
A Different Perspective

Banks may lack sufficient buffers if all instruments are unprotected.

4.1 out of 5 (5 ratings)

More by Ben Bernanke

Explore all 247 Ben Bernanke quotes

More Allowed quotes

Browse all 1,069 Allowed quotes